You are on page 1of 37

REGISTERED NO.

S-2771
EXTRAORDINARY

THE BALOCHISTAN GAZETTE


PUBLISHED BY AUTHORITY
NO. 59 QUETTA THURSDAY APRIL 19, 2018.

BALOCHISTAN PROVINCIAL ASSEMBLY SECRETARIAT.

NOTIFICATION.

Dated Quetta, the 19th April, 2018.

No. PAB/Legis:V (15)/2017/992. The Balochistan Public Private


Partnership Bill (Bill No.15 of 2018), having been passed by the Provincial Assembly
of Balochistan on 10th April, 2018, and assented to by the Governor Balochistan, on
18th April, 2018 is hereby published as an Act of the Balochistan Provincial
Assembly.

THE BALOCHISTAN PUBLIC PRIVATE PARTNERSHIP (ACT No. 1 of 2018)

AN
ACT

to promote, facilitate and encourage participation of the private sector’s investment


in the development, financing, construction / reconstruction, operation &
maintenance of public infrastructure, land or other development projects, including
but not limited to procurement of public asset or services arising out of such public
assets, through Public Private Partnerships modality in a fair, transparent and
competitive process.
Printed by the Chief Controller, Government Printing and Stationery Department, Balochistan Quetta.
Price Rs.180/= D.No. 59-250-Copies -07-2018.
2

Preamble. WHEREAS recognizing the growing infrastructure gap in the


province of Balochistan, growing urgency to procure,
implement the infrastructure projects and to improve overall
service delivery through innovation and efficiency, in order to
remove the budgetary constraints, achieving the value for
money in infrastructure projects and related services thereto
through principles of fairness, competition and transparency in
the procurement of public private partnerships, and to provide
for the matters ancillary thereto; it is hereby enacted as
follows:

CHAPTER 1: PRELIMINARY

Short title, extent, 1. (1) This Act may be called the Balochistan Public
commencement Private Partnership Act, 2018.
and application.
(2) It extends to the whole of Balochistan; except the
Tribal Areas.

(3) It shall come into force at once.


(4) This Act does not apply to the following
infrastructure projects or infrastructure facilities:

(a)
(i) projects between any statutory body and any
Government department / attached
department / Authority / local authority;
(ii) projects which may be taken over by any
concessionaire or private sector entity on
privatization or dis-investment by any
Government department, attached
department, statutory body, State corporation,
local authority or agency; or
(iii) projects which have been expressly excluded
from the provisions of this Act or which are not
prescribed by the Government; and
(b) the procurement of goods, works or services
contemplated in Balochistan Public Procurement
Regulatory Authority Act, 2009 (Act No VIII of 2009).
3

Definitions. 2. In this Act, unless there is anything repugnant in the


subject or context:

(a) “Act” means the Balochistan Public Private


Partnership Act-2018;

(b) “Asset” means an existing infrastructure asset of


a relevant government agency or a new asset to
be acquired through Public Private Partnership
Agreement;
(c) “Bid” means request for proposal or pre-
qualification, issued by Government Agency
under the provisions of this Act;
(d) “Bidder” or “Bidders” means a person, including
groups of persons or a company or a firm or a
consortium thereof, other than a Government
Agency, that participate in procurement process
undertaken by a Government Agency in
accordance with the provisions of this Act;
(e) “BPPRA” means Balochistan Public Procurement
Regulatory Authority, constituted under the
Balochistan Public Procurement Regulatory
Authority Act, 2009 (Balochistan Act VIII 2009);
(f) “Committee” means the Steering Committee
constituted under Section 6 of this Act;

(g) “Concessionaire" means, subject to the approval


of Steering Committee, a successful Bidder in
the procurement process with whom a
Government Agency executes a Public Private
Partnership Agreement;

(h) “Concession Contract” means a written


agreement between a Government Agency and a
private party for implementation of a project and
any other agreement subsidiary or incidental to it;

(i) “Consortium” means an association of persons /


companies who have formed the association
under a legally enforceable contractual
4

arrangement for purposes of entering into a PPP


Agreement;

(j) “Construction” includes reconstruction,


rehabilitation, renovation, improvement,
expansion, addition, alteration and related
activities;
(k) “Departmental PPP Node” means a unit
established by Government Agency for
development of PPP Project(s) under Section 13
of this Act;

(l) “Feasibility Study” means, without limitations a


pre-feasibility study, a study undertaken to
explore the technical, financial, legal, social and
environmental aspects of a Public Private
Partnership project;

(m)“Government” means the Government of


Balochistan;

(n) “Government Agency” means a department,


attached department, autonomous body of the
Government, authority, or any organization or
corporation owned or controlled by the
Government;
(o) “Infrastructure Project Financing Facility-IPFF”
means a non-banking financial institution;
(p) “Lender” means a financial institution, bank or an
establishment providing financial support or loan
to a private party for implementation of a PPP
project;

(q) “Member” means Member of the Balochistan


PPP Steering Committee;

(r) “P&D Department” means Planning and


Development Department of the Government;

(s) “PDF” means Project Development Facility, a


pool of funds, which may include contribution
from international development partners, which
are available to pay for consulting services
5

required for the preparation and execution


support of PPP Projects;

(t) “Prescribed” means prescribed by the rules or


regulations;

(u) “PPP Board” means a final approving authority


established under Section 5 of this Act;
(v) “PPP Unit” means the Public Private Partnership
Unit established under this Act in Planning and
Development Department of Government of
Balochistan;
(w) “Private party” means an eligible Bidder who
enters into a public private partnership
agreement with a Government Agency;
(x) “Project” means an infrastructure project,
provision of infrastructure related services or
both, under a public private partnership;
(y) “Province” means the Province of Balochistan;
(z) “Public Private Partnership” or “(PPP)” means a
contractual arrangement between a Government
Agency and a Concessionaire, made in
accordance with this Act, in which the
Concessionaire:

(i). undertakes to perform or undertake any


infrastructure project or infrastructure
facility as specified in the First Schedule or
as prescribed;
(ii). undertakes to provide or provides such
social sector services as may be
prescribed;
(iii). assumes substantial financial, technical
and operational risks in connection with the
performance of the institutional function or
use of Government property; and
(iv). receives consideration for performing a
public function or utilizing Government
property, either by way of:
6

(a). a fee from any revenue fund or a


department's/attached department/
authority’s budgetary funds; or
(b).User levies collected by the
concessionaire from users or
customers for a service provided by
it; or
(c). a combination of the consideration
paid under sub-paragraphs (a) and
(b);

(aa) “Public Private Partnership Agreements” are


written agreements between Government
Agency and private sector entity for the purpose
of providing public infrastructure, general public
facilitates and related services or both in
accordance with the provisions of this Act;
(bb) “Public Property” means any movable or
immovable assets or rights which are in public
domain pursuant to law or contract;

(cc) “Regulatory Agency/Body" means a public


authority that is entrusted with the power to issue
and enforce the laws governing infrastructure
development or the provision of services;

(dd) “Risk Management Unit” means the Risk


Management Unit established in Finance
Department of Government of Balochistan under
this Act;

(ee) “Rules” means the rules made under the Act;

(ff) “Schedule” means a Schedule appended to the


Act;

(gg) "Unsolicited proposal"' means any proposal


relating to the implementation of an infrastructure
project or infrastructure facility or for provision of
a public service, based on genuine innovative
solution / idea, that is not submitted in response
to a request for proposal or solicitation issued by
Government Agency within the context of a
7

competitive selection procedure;


(hh) “User Fee” means fee, rate, toll or other charges
imposed for the use of all or part of a government
infrastructure or land or development facility or
public service; and
(ii) “Viability Gap Fund (VGF)” means the fund
established by the Government for the purposes
of compensating, on the recommendation of the
Committee, the private party to a PPP agreement
for any revenue shortfalls, through grants,
subsidies or guarantees.

Private Sector 3. (1) Notwithstanding anything to the contrary


Participation. contained in any other law for the time being in force, the
Government and its agencies will be authorized to structure,
procure, implement the projects thereby seeking participation
from private sector in appropriate projects, subject to the
provisions of this Act;
(2) Subject to provisions of this Act, the Government
and its agencies will be fully empowered to enter into PPP
Agreements with private parties under mutually agreed terms
and conditions, subject to that all the terms and conditions are
duly approved by the Committee;
(3) Subject to the approval of the Committee, the
Government Agency may enter into Public Private Partnership
Agreement with the Private Party to vest public property,
without transferring the title to the public property, for
development, procurement, implementation, rehabilitation,
construction, operation, maintenance of the Projects and for
any other appropriate purposes as may have been decided by
the Committee.
Principles of 4. Every Government Agency must adhere to the following
probity and principles of probity and transparency during the initiation,
transparency. preparation, procurement, management and implementation of
the Public Private Partnership Projects:
(a) a Government Agency must carry out its
responsibilities relating to the initiation,
preparation, procurement, management and
implementation of public private partnership
project(s) with complete probity and in a fair
8

and transparent manner;


(b) a Government Agency may not include in the
procurement document, any condition or
specification, which favours or likely to favour
any individual bidder or a group of bidders
unduly;
(c) the project officers, transaction advisors,
procurement committee members, and
members of the management team, may not
have direct or indirect interest in public private
partnership project(s), which the Government
Agency is intending to implement and must
disclose such interest to the principal
accounting officer before any decision is taken
by the Government Agency with respect to a
public private partnership;

(d) the principal accounting officer of the


Government Agency must:
(i). evaluate the conflict of interest
contemplated in clause (c) and must
formulate and implement appropriate
responses to the such conflict of
interests, such as recusal by the person
concerned from any position where the
conflict or interest could influence a
decision by the Government Agency;
and
(ii). keep or cause to be kept a record of
disclosures made in terms of clause (c);
and
(e) the principal accounting officer must keep or
cause to be kept a record of actions and
decisions taken by the Government Agency in
respect of public private partnership project (s),
including tender proceedings.
9

CHAPTER 2
ORGANIZATIONAL ARRANGEMENT
ESTABLISHMENT AND FUNCTIONS OF THE BALOCHISTAN PUBLIC
PRIVATE PARTNERSHIPS ENTITIES.

Establishmen 5. (1) The PPP programme in Balochistan shall run


t of the PPP under the following institutional arrangements. Final cost of the
Board. projects, contractual and financial arrangements including any
subsidies or concessions etc. will be approved by the following
PPP Board:
(a) Chief Minister, Balochistan. Chairperson.
(b) Minister, P&D department. Member.
(c) Minister, Finance Department. Member.
(d) two Members of Provincial Assembly,
nominated by the Speaker. Member.
(e) Chief Secretary, Balochistan. Member.
(f) Additional Chief Secretary (Dev:) Member.
(g) Secretary, Government of Balochsitan,
Finance Department. Member.
(h) Managing Director, PPP Unit. Member/Secretary.

(2) The PPP Board may amend, if deemed necessary,


the “First Schedule” of this Act.

Establishmen 6. (1) A committee to be known as “Balochistan Public


t of the Private Partnerships Steering Committee”, hereinafter referred
Steering to as the Committee, shall be notified in the official Gazette, with
Committee. a mandate to promote, facilitate, coordinate and supervise
private investment in infrastructure and other development
projects by using the Public Private Partnership approach. The
Committee shall be comprised of the following:

(a) Chief Secretary, Balochistan. Chairperson.


(b) Additional Chief Secretary (Dev.) P&D
Department. Member.
(c) Senior Member, Board of Revenue. Member.
10

(d) Secretary, Government of Balochistan,


Finance Department. Member.
(e) Secretary, Government of Balochistan,
Law Department. Member.
(f) Secretary (Planning), Government of
Balochistan, P&D Department. Member.
(g) Secretary, Government of Balochistan,
Concerned Department / Chairman, Director
General of the concerned authority. Member.
(h) President Lasbela Chamber of Commerce
& Industries. Member.
(i) President of any other Chamber of Commerce
& Industries of Balochsitan (by election from
amongst them). Member.
(j) Managing Director, Balochistan Board of
Investment. Member.
(k) Chief Economist, P&D Department,
Balochistan. Member.

(l) MD, Balochsitan Public Procurement


Regulatory Authority. Member.

(m) Sector Specialist(S) from Private Sector. Member.


(n) Managing Director, PPP Unit. Member/Secretary.

(2) The sector specialist(s) will be nominated on honorary


basis and project to project by the chairperson keeping in view
the type of projects being considered.

(3) In the absence of the chairperson, the Additional


Chief Secretary (Dev.) shall preside over the meeting.

Meetings of 7. (1) All meetings of the Committee shall be convened by


the Steering the Secretary, on the instructions of the Chairperson, on such
Committee. day and time as may be determined by the Chairperson in this
behalf. At least seven members present shall constitute a
quorum.
(2) Meetings of the Committee shall be convened as and
when required in a financial year on such day, at such time and
11

place as the Chairperson may determine.


(3) All decisions of the Committee shall be expressed in
terms of the opinion of the majority of its members present and
voting. In the event of an equality of votes, the Chairperson or,
as the case may be, the Member presiding the meeting shall
have a casting vote.

(4) All orders, decisions, recommendations of the Committee


shall be recorded in writing and duly signed by the Chairperson

Functions of 8. (1) Without prejudice to the generality of the following, the


the Steering Committee shall:
Committee.
(a) formulate policies, rules and regulations relating to
the public private partnerships for the purpose of
this Act;
(b) supervise and coordinate the implementation of
the Act, policy, relevant rules and regulations;
(c) periodically, review the legal, institutional and
regulatory framework of public private partnership
with the objective to promote PPP in Balochistan;
(d) advise and facilitate the agencies to identify,
develop, structure and procure the projects;
(e) approve pipeline of PPP Projects for Balochistan
to the PPP Board and ensure that the pipeline
projects are consistent with provincial plans,
policies and programs. moreover, prioritize the list
of pipeline projects for implementation;
(f) approve or reject or send back for reconsideration
PPP project proposals, including project concept
note and feasibility studies, submitted by the
agencies;
(g) ensure value for money by conducting an analysis
to evaluate projects;
(h) examine and approve or disapprove the feasibility
study conducted by a Government agency and
recommend the feasibility study for final approval
by the PPP Board;
(i) recommend funding for PPP projects through
Viability Gap Funding and/or Infrastructure Project
Financing Facility (IPFF);
(j) evaluate any direct or contingent support for a
12

project proposal submitted by any Government


agency and place the same for consideration by
the PPP Board;
(k) approve standardized contractual provisions and
the sector specific provisions of the model public
private partnership agreements;
(l) ensure that each project agreement is consistent
with the provisions of this Act and in line with the
provincial priorities specified in the relevant policy
on public private partnerships or as presented in
development plans or strategies;
(m)determine the maximum limit of government
support with regards to bids for any PPP project
and have the limit approved by the PPP Board;
(n) review user levies proposed and rationalize, reject or
recommend the same for approval by the PPP
Board;
(o) perform any other function as may be conferred on
it by this Act; and
(p) take all other steps necessary for giving effect to
the provisions of this Act.
(2) The Committee may establish such sub-
committees as it may consider necessary for the better
performance of its functions and the exercise of its functions
and the exercise of its powers under this Act.

Establishmen 9. (1) A Balochistan Public Private Partnership Unit,


t of the hereinafter referred to PPP Unit, shall be established in the
Balochistan Planning and Development Department, Government of
Public Private Balochistan.
Partnership
Unit. (2) All the functions and administration of the PPP
Unit shall vest with the Managing Director, PPP Unit of the
Planning and Development Department of the Government of
Balochistan who shall be assisted and supported by a
coordinator. The Managing Director shall report to the Additional
Chief Secretary (Dev.).

(3) Managing Director, PPP Unit and technical,


financial and legal professionals/ advisers shall be recruited on
competitive basis by the following Selection Committee:

(a) Chief Secretary, Balochsitan. Chair.


13

(b) One member each from the PPP


Units/Risk Management unit of other
Provinces. Member.
(c) Additional Chief Secretary (Dev.) Member.
(d) Secretary, Government of Balochsitan,
Finance Department. Member.
(e) Secretary, Government of Balochsitan
S&GAD Department. Member/Secretary.

Functions of 10. The functions of the PPP Unit are to:


PPP Unit.
(a) serve as the secretariat and technical arm of the
Committee;
(b) assist the Committee in preparation of policies,
rules, regulations and guidelines related to the PPP;
(c) provide technical, financial and legal etc.
inputs through relevant experts/ PPP Unit,
established under this Act, to the Committee;
(d) provide information about and guidance on
PPP interventions in the province and to act as
resource center;
(e) provide support to the agencies throughout the
project life cycle;
(f) prepare and regularly update a pipeline of the
projects in consultation with the agencies and
recommend the same to the Committee and
thereafter make available updated lists of the
pipeline PPP projects to the Government
Agencies;
(g) recommend the projects for consideration by the
Committee under this Act;
(h) in consultation with the Risk Management Unit,
coordinate / facilitate the Committee to process
cases for consideration / approval of subsidy,
grant user fee, availability of payments or annuity
payment by the PPP Board;
(i) recommend to the Committee award of contracts
cases;
14

(j) provide capacity building and advice to


government agencies involved in the planning, co-
ordinating, undertaking or monitoring of
projects under this Act.
(k) assist government agencies, where the Unit
considers it necessary, to design, identify, select,
prioritize, appraise, evaluate and negotiate
projects;
(l) ensure that the procurement process relating to a
project conforms to this Act and to that of
Balochistan Public Procurement Regulatory
Authority’s best procurement practices;
(m) conduct research and gap analysis to ensure
continuous improvement in the implementation of
public private partnerships;
(n) publish/submit periodical reports after approval
from the Committee and share information on the
media;
(o) facilitate smooth transfer of assets at the expiry or
early termination of a project; and
(p) carry out such other functions as may have
conferred on it by the Committee under this Act;

Establishmen 11. (1) The Government shall, by notification, published in


t of Risk the official Gazette, establish a Risk Management Unit in the
Management Finance Department of Government of Balochistan to act as a
Unit. financial guardian for the PPP projects.

(2) The Risk Management Unit shall consist of;

(a) Risk Management Specialist, who shall


report to the Secretary, Government of
Balochistan, Finance department through
Additional Secretary (Resource);
(b) Legal and Regulatory Specialist;
(c) Risk Analyst;
(d) Financial Analyst; and
(e) Such staff / professionals considered
necessary for better service delivery and
15

effective performance of the functions, as


assigned under this Act, of the Risk
Management Unit.

(3) Risk Management Specialist (head of Risk


Management Unit) and professional staff shall be recruited on
competitive basis by the Selection Committee constituted as per
clause 9 (3) of this Act.

Functions of 12. (1) The Risk Management Unit shall:


Risk
Management (a) develop risk management guidelines for
Unit. approval by the Committee;
(b) provide support and advice to any agency
with regard to risk management in a project
throughout the public private partnership
process;
(c) examine, in consultation with the PPP Unit,
whether requests for Government support
and the proposed risk sharing
arrangements are consistent with the Act,
rules and regulations, and are fiscally
sustainable;
(d) recommend the inclusion of approved
Government support in the budget of the
Province;
(e) monitor direct and contingent liabilities of
the Government incurred through the PPP
projects; and
(f) perform such other functions as may be
prescribed or as the Committee may
assign.

(2) The Risk Management Unit will forward its


recommendations on any PPP projects or financial issue to PPP
Unit for placement of the same before the Committee for
consideration.

Establishmen 13. (1) A Government Agency that intends to enter into a


t of Public Private Partnership arrangement, in form of a concession
Departmental contract with a concessionaire, shall establish a Public Private
PPP Nodes. Partnership Node with the approval of Committee. The PPP
Node shall be headed by the head of the government agency
and may consist of senior representatives, not below BPS-19,
16

from other departments and such other financial, technical,


procurement and legal etc. personnel.

(2) The PPP Node shall:

(a). identify suitable projects and prioritize these


within its sector or geographical area of
responsibility;
(b). recruit transaction advisors for project
preparation and tendering in consultation
with PPP Unit;
(c). supervise the preparation of the feasibility
study and if its outcome is positive, submit
the project proposal through the PPP Unit
to the Committee;
(d). conduct a competitive tendering process,
including pre-qualification and bidding to
select the private party;
(e) carry out bid evaluation and submit
recommendations on contract award to the
Committee;
(f). negotiate and sign the PPP agreement
after clearance from the Committee;
(g). monitor and evaluate implementation and
operation of the project;
(h). if needed, seek support and advice from
the PPP Unit and Risk Management Unit
for the performance of any of the above
functions;
(i) prepare monthly and annual progress
reports (PC-III A and PC-III B) on the
Agency’s projects to be submitted to the
Committee through PPP Unit;
(j) implement the recommendations and
guidelines approved by the Committee;
(k) table such information as shall be
required by the PPP Unit, Risk
Management Unit or the Committee; and
(l). perform such other functions as may be
assigned to it by the Committee.
17

CHAPTER 3
Public Private Partnership Process.

Project 14. (1) No Government Agency shall select, prioritize,


Inception. structure, procure and implement a project unless it complies
with the following conditions:

(a) subject to the policy of the Government


concerning the infrastructure or related
services projects falling within its several
sectoral priorities, the Government
Agency shall identify a potential project and
intimate its initial decision to PPP Unit for
undertaking the project under the Public
Private Partnership modality; and
(b) conduct or cause to conduct a preliminary
economic cost-benefit analysis of the
project through its PPP Node from its own
available resources, which may include
public sector comparator. The analysis,
inter-alia, may include:

(i) The strategic objectives of


implementing the project as a
public private partnership;
(ii) The projected cost of the
project;
(iii) The benefit of the project to
the government agency;
(iv) Value for Money to the
Government and the users of
the Project throughout the
lifecycle of the Project;
(v) The rationale for the project;
(vi) The projected policy
outcomes of the project; and
(vii) How the project is to be
managed by government
agency.

(2) Where a government agency confirms from the


preliminary economic cost-benefit analysis under sub-
section (1) that the project is suitable for implementation
as a public private partnership, the government agency
18

shall submit a concept paper, containing preliminary


economic analysis, in the form a report along with all the
relevant information and data, to the PPP Unit.

(3) The PPP Unit, after due consideration and


evaluation of the aforesaid report, considers that there
exists a need for further studies and analysis are
required for the development and implementation of the
project shall give its consent to the Government Agency
to further the project development and implementation
under PPP modality by conducting detailed feasibility
studies. Upon consent and initial approval by the PPP
Unit, the PPP Unit shall:

(a) register the public private partnership project,


specifying the type of the project, the value or
size of the project and any other information
that is relevant to the project, and
(b) recommend the concept note for approval by
the Committee.

(4) The PPP Unit shall asses the expertise available


within the Government Agency for the purposes of the PPP
project. In case the Government Agency lacks necessary
expertise, the PPP Unit shall point out categories
of experts, advisers or consultants required by the
Government Agency for further development of the project
in accordance with the provisions of this Act.

(5) In case the Committee approves the


recommendations of the PPP Unit, the Government Agency
shall, with in PPP Node, by designate a project team
headed by a project officer for the entire duration of the PPP
project.

Feasibility 15. (1) After the initial screening of a PPP project by the
Assessment. PPP Unit, the Government Agency shall, for the purposes of a
PPP project, shall undertake the following steps for further
development of the PPP project:

(a) Preparation of feasibility assessment; Upon


initial screening by the PPP Unit, Risk
Management Unit and the Committee, the PPP
19

project is considered as viable option, the


Government Agency shall undertake or cause to
undertake the pre-feasibility or feasibility study, as
the case may be, for in-depth analysis for
determining that aforesaid PPP project is
financially and economically feasible capable of
providing value for money to the Government and
users of a PPP project; and

(b). The feasibility study, inter-alia, shall:

(i) identify and define the activity which


the Government of Balochistan
intends to outsource to a private
party as public private partnership;
(ii) project the impact of performing the
function by private party, on the staff,
assets, liabilities and revenues of the
government agency;
(iii) assess the need of the government
agency in relation its functions
including the options available to the
government agency to satisfy the
needs, and the advantages and
disadvantages of each of the options
identified;
(iv) d e m o n st r a t e c o m p a r a t i ve
advantage in terms of strategic and
operational benefits for
implementation under a public
private partnership agreement; and
(v) describe in specific terms:

(a) indicate any envisaged future


contingent liability;
(b) the nature of the functions of
the government agency, the
specific functions to be
performed by the private party
under the project, and the
expected inputs and outputs
of the project;

(c) where the project involves


20

the transfer of the


performance of a function of
the government agency to the
private party, the nature of the
functions to be transferred;
(d) the extent to which the
function in paragraph (b) (ii)
may be legally and effectively
performed by a private party;
(e) the most appropriate type of
public private partnership
which the government agency
should use to implement the
project; and
(f) where the project involves the
use of property of the
Government Agency or of
Government of Balochistan, a
description of property, the
current use, if any, of the
property and a description of
the type of use that the private
party may legally subject the
property;

(vi) demonstrate that the project will:

(a) be affordable to the government


agency;
(b) transfer appropriate financial,
technical and operational risk
involved to the private party; and
(c) provide value for the money for
the government agency;
(vii) explains the capacity of the
government agency to effectively
enforce the agreement, including the
ability to monitor the project; and
(viii) assess the capacity, resources and
ability of the private party to
implement the project.

(2) The assessment under clause (b) of subsection (1)


21

shall indicate the comparative projections of:

(a) the full costs to the Government for the activity


if that activity is not outsourced through public
private partnership agreement; and
(b) the full costs to the Government for the activity
if that activity is outsourced through a public
private partnership agreement.

(3) The Government Agency shall submit a report of the


feasibility study to the Committee through the PPP Unit for
approval together with the documents to be used to procure
the project, the evaluation criteria to be used and the draft
PPP Agreement. The PPP Unit shall have the feasibility
study reviewed by the Risk Management Unit.

(4) The Government Agency shall not proceed with or


initiate a procurement process unless the Committee has
approved the feasibility study of the PPP Project. While
considering the feasibility study, the Committee suggests
amendments or revisions in the feasibility study, inter-alia,
concerning assumptions as to the affordability, value for
money, financial model and substantial technical,
operational and financial risk transfer. The Government
Agency after due incorporations of the aforesaid shall re-
submit the feasibility study to PPP Unit for approval of the
Committee.
(5) The Government Agency, as far as possible, shall
complete the whole process commencing from initial
screening up to the approval of feasibility study within a
period of six months. In exceptional circumstances
concerning the complexity of a PPP Project, the PPP Unit
may extend the time to a reasonable timeframe required for
the completion of the feasibility study.

Procurement 16. (1) Within a time frame specified by the Committee in


of public consultation with the PPP Unit, the Government Agency shall
private prepare all the bidding documents along with the draft of the
partnership. PPP Agreement. Subject to the approval of the PPP Unit, in
accordance with the directions of the Committee, if any, the
Government Agency shall advertise the bidding documents in
English and Urdu national newspapers of repute and in English
language only in International newspapers in case the
Government Agency opts for an International competition.
22

Advertisement and the bidding shall also be uploaded on the


website of BPPRA in case of both national and international
competitive bidding.

(2) As far as applicable to the extent provided in BPPRA Act


or rules framed there under with respect to fairness, competition
and affordability, the Government Agency, while preparing and
advertising the bidding documents, including but not limited to,
setting the evaluation criteria, procurement mode and process
and any of the terms and conditions of the bidding documents,
shall adhere to such principles during all stages of the
procurement process.

(3) Without prejudice to the generality of the foregoing, the


Committee in consultation with the PPP Unit may prescribe
specific rules and regulations for the procurement of PPP
projects in accordance with the international best practices.
During the intervening period, all the rules and regulations
issued by Balochistan Public Procurement Regulatory Authority
for the procurement of projects shall be applicable to the PPP
projects.

Unsolicited 17. (1) The PPP Unit in consultation with and under the
Proposals. supervision of the Committee shall prescribe special
guidelines for unsolicited proposals, which shall take care
of, inter-alia, the following:
(a) areas, sectors and projects for which
proposals may be taken as unsolicited
proposals;
(b) application process;
(c) treatment of unsolicited proposals;
(d) approval process; and
(e) prioritization and implementation strategy.
(2) Unless decided otherwise by the
Government, there shall be a presumption against
the grant of subsidy, financial or fiscal support for
unsolicited proposals.

(3) Subject to the guidelines prescribed


by the PPP Unit under sub-section (1), the
Committee may:
(a) accord its preliminary acceptance of the
unsolicited proposal in principle and while
23

doing so may propose further steps or


prescribe furnishing of more information
including further market or economic analysis
required for proper development of the
project; or
(b) subject to the overall approval of the PPP
Board accept the unsolicited proposal in
totality keeping in view of the best interests of
the public; or
(c) reject the unsolicited proposal; or
(d) postpone the unsolicited proposal for
procurement;
(4) The PPP Unit shall, as far as possible and in accordance
with the guidelines prescribed under sub-Section 1, protect,
preserve and wherever required secure the interests of the
proponent of the unsolicited proposal.
(5) The unsolicited proposal shall pass through all stages of
project preparation, appraisal and approval and subsequently
implementation as per rules and regulations. Competitive
procurement procedure shall be followed; however, the project
proponent will be given five percent additional weighting on the
combined secured score in evaluation.
Preparation 18. (1) The draft Public-Private Partnership Agreement
and shall form a part of bidding documents.
negotiation
of Public- (2). The draft Public-Private Partnership Agreement
Private shall clearly define the legal relationship between the
Partnership Government Agency and the selected private party, as well
Agreement. as their respective rights and responsibilities, including the
specific government support for the project.

(3). The draft Public-Private Partnership Agreement


shall include, but not limited, to the following provisions, as
applicable:

(a) Type of project and applicable PPP mode;


(b) Term of the Public-Private Partnership
Agreement;
(c) Scope of work and services to be
provided under the project;
(d) Main technical specifications and
performance standards;
24

(e) Environmental (including heritage


resource protection, if applicable) and
safety requirements;
(f) Implementation milestones and
completion date of the project;
(g) Financial model (in soft form also);
(h) Cost recovery scheme through user fees,
including a mechanism for periodical
adjustment;
(i) Performance bonds for construction works
and operation;
(j) Minimum insurance coverage and
identification of risks which may be
uninsurable;
(k) Performance monitoring regime
encompassing, inter alia, acceptance /
quality tests and procedures;
(l) Risk designing and sharing between the
parties;
(m) Penalties and liquidated damages
provisions for delays;
(n) Type and amount of Government support;
(o) Hand back requirements at the end of the
term of the Public-Private Partnership
Agreement, if any;
(p) Warranty period and procedures after the
hand back;
(q) Requirements and procedure for
variations of the Public-Private
Partnership Agreement;
(r) Grounds for and effects of termination of
the Public Private Partnership
Agreement, including force majeure;
(s) Compensation formula for early
termination scenarios;
(t) Procedures and venue for dispute
resolution;
(u) Financial reporting by the private party;
(v) Supervision mechanism of the Agency;
and
(w) Governing law and jurisdiction.

(4) The Government Agency shall not enter into a


25

Public-Private Partnership Agreement unless the


procedure specified in this Act has been followed.

(5) Contract negotiations for the conclusion of a


Public-Private Partnership Agreement shall be completed
between the Government Agency and the private party
within six months after the contract award. The
Government Agency shall not execute the PPP Agreement
unless the final negotiated draft is duly approved by the
Committee.

(6). The agreement shall only be amended or varied


with approval of the Committee.

(7). The Committee shall not approve an


amendment, or variation to the project agreement under
sub section (6) unless the agreement, if so amended or
varied, ensures that:

(a) The project continues to provide value for money;


(b) The project continues to be affordable, where
such amendment, variation or waiver has a
financial implication;
(c) The transfer of appropriate risks to the private
party continues;
(d) The continued provision of efficient and effective
services to the public continues; and
(e) The protection and preservation of the
environment continues.

Project 19. (1) The PPP Agreement shall be executed by the


implementati Government Agency with the special purpose vehicle
on and company established by the private party in Pakistan keeping
operation. in line with the principles of project finance. The private party
sponsors shall not be allowed to change their respective
shareholding interests in the special purpose vehicle during
the debt service period.
(2) Development, implementation, construction,
commissioning, rehabilitation, operations and management of
the PPP project or any other activity taken by the private party
there- under shall be in accordance with the terms and
conditions of the PPP Agreement.
(3) The private party shall give all performance bonds
and guarantees in accordance with the terms and conditions of
26

the bidding documents to secure its obligations under the PPP


Agreement in respect of the PPP project and additionally shall
procure at its own cost all types of insurances for works and
project assets during the subsistence of PPP Agreement.

Government 20. (1) Subject to the extent, limitations and conditions


Support. attached thereto of the Government support approved by the
PPP Board, the Government Agency shall indicate the
Government support for a project in the bidding documents as
well as in the PPP agreement.

(2) The Government support may take the following


forms:
(a) Administrative support to the private party in
obtaining licenses and other statutory and
non-statutory clearances from the
Government, any public sector organisation or
a Government Agency for purposes of the
project on such terms and conditions as may
be prescribed: such support shall be available
for all types of projects;
(b) Provision of utility connections for power, gas,
telephone and water etc. at project site;
clearance of right of way or acquisition of land
necessary for the project; and rehabilitation
and resettlement necessitated because of the
execution of the project: such support shall be
available for all types of projects; and
(c) Government equity, in the form of land or
infrastructure facilities owned by the
Government or a Government Agency, without
transferring the title there to the private party or
the special purpose vehicle company, to be
calculated with reference to the current market
value of land or infrastructure or future value of
discounted cash flows accruing or arising from
asset to be offered, with reference to the
project cost and its capital structure or debt
equity ratio: such support on first come first
served basis shall be available for the project
where the bidding competition is not instantly
expected. However, the private party shall not
be entitled to create any mortgage, charge or
lien over such land or infrastructure to secure
27

its repayment obligations of any loan obtained


or to be obtained by the private party for the
PPP project.
(3) PPP projects may be eligible for provincial tax
exemptions and reduction of or exemption from various
appropriation charges as prescribed on case-to-case
basis. However, such exemptions shall not be extended
beyond the period of debt service period of the private
party of the commercial debt component of its financing
requirements for the implementation of the PPP project.
Matters 21. (1) The Government Agency shall set the user levies at
incidental to levels that ensure financial viability of the project by fully
fixation of covering the capital, operation and maintenance costs plus a
user charges reasonable rate of return to the private party or the Government
etc. Agency or both.
(2) Notwithstanding anything contained in any other
law, the private party shall have the right to receive or collect
tariffs or payments in accordance with and at the rates set forth
in the PPP Agreement.
(3) Unless specified in the bid documents, the
Government Agency shall determine the user levies and any
other applicable charges through bidding and the user levies
and any other charges shall be adjusted periodically during the
term of the PPP Agreement in accordance with the terms and
conditions of the PPP Agreement.
(4) If the Government Agency keeps the user levies at
lower levels to make the services provided by the PPP project
affordable to the end users, the Government Agency shall
compensate the private party for the difference by making
appropriate payments as agreed in the PPP Agreement through
VGF or alternatively may extend the duration of the PPP
Agreement to such an extent that private party stands fully
compensated.
(5) The Government may exempt, through notification
in the official gazette, certain classes of users from payment of
user fee.
28

CHAPTER 4

Viability Gap 22. (1) At any time after the commencement of this Act,
Fund. the Government shall establish a Viability Gap Fund to support
PPP projects and finance the gap between project revenues
constrained by affordability considerations and revenues
needed to generate a fair return on investment for the PPP
projects.

(2) The VGF shall be established by an amount


specified by the PPP Board as prescribed.

(3) The Balochistan VGF shall be a revolving fund


replenished by the Government from time to time or as may be
prescribed. The other sources of the fund may comprise of the
following:
(a) grants from the Federal Government;
(b) grants and donations from the international donor
agencies;
(c) income from the investments; and
(d) any other lawful sources approved by the
Government.
(4) VGF shall be used for PPP projects that have a
strong economic and social justification but fall short of financial
viability because of affordability constraints imposed on tariffs.
VGF mechanism will be elaborated in VGF Guidelines by the
Risk Management Unit.
(5) The Government shall conduct regular audit of the
VGF in accordance with the requirements of law for the time
being in force.

Project 23. (1) The Government shall establish a revolving fund,


Development to be called Project Development Facility-PDF, which is
Facility available to pay for consulting services required for the
(PDF). preparation and execution of Public Private Partnership
projects. The cost incurred on the feasibility or the project
preparation may be funded from the PDF and will be recovered
from the winning bidder of the PPP intervention(s).
(2) The PDF will be administered by PPP Unit and
shall be utilized by the PPP Nodes for project development.
(3) PPP Unit shall prepare guidelines for utilization of the
PDF.
29

Infrastructure 24. The Government may establish, at least after eight years
Project of the promulgation of this Act, Infrastructure Project Financing
Financing Facility, a non-banking financial institution, if financial markets’
Facility position so demands. The Committee will recommend to the
(IPFF). Government, with justification, the establishment of IPFF when
pressing need emerges. The purpose of establishing such
institution will be to provide financial assistance in shape of loan
to the private partners. The IPFF will be established with the
financial assistance of multilateral and bilateral development
partners. The IPFF will make equity contributions in the local
currency to PPP projects or provide residual for 15-20-year
funding at commercial rates through fixed-rate rupee-based
loans if the financing needs of the private sponsors cannot be
fully met by the market. The IPFF would set minimum quality
standards for project proposals. Its day-to-day operations would
be independent from the Government, and reporting to the
Government would be made through its Board of Directors.

CHAPTER 5
MISCELLANEOUS.

Power to 25. The Government may:


prescribe
standards. (a) prescribe and enforce performance standards for
a Public-Private Partnership project, including
standards of performance for a private party with
regard to different aspects of the services to be
rendered to the users and the Government;
(b) prescribe quality standards, including standards
for the materials, equipment, processes and
resources used, or persons employed, during all
stages of the project to ensure sustainable
delivery of services and adherence to the
prescribed quality standards;
(c) link entitlement to the Viability Gap Fund, subsidy,
annuity and other compensation and benefits with
certain performance standards as it may deem fit;
(d) issue and enforce accounting guidelines for proper
accounting of the projects; and
(e) prescribe any other standard for regulating the
Public-Private Partnership projects.
30

Indemnity. 26. (1) The private party or its sub-contractor shall,


subject to sub-section (2), be responsible for, and shall release
and indemnify the Agency, its employees, agents and
contractors on demand from and against all liability for:

(a) death or personal injury;


(b) loss of or damage to property, including
property belonging to the Government or
Government Agency or for which it is
responsible;
(c) breach of statutory duty; and
(d) actions, claims, demands, costs, charges and
expenses, including legal expenses on an
indemnity basis which may arise out of, or in
consequence of, the design, construction,
operation or maintenance of the assets; the
performance or non-performance by the
private party or its sub-contractor of its
obligations under the Public-Private
Partnership Agreement; or the presence on the
Government’s property of the contractor, a
subcontractor, or their employees or agents.

(2) The private party or its sub-contractors


shall not be responsible or be obliged to indemnify the
Agency for:

(a) any of the matter referred to in clause (a) to


(d) of sub section (1) above which arises as
a direct result of the private party or its sub-
contractor acting on the instruction of the
Government Agency;
(b) any injury, loss, damage, cost and expense
caused by the negligence or wilful default of
the Government Agency, its employees,
agents or contractors, or a breach by the
Government Agency of its obligations under
the Public-Private Partnership Agreement,
and;
(c) any claims made under the Act in respect
of the Government’s property.
31

No 27. The Provincial Government or the Government Agency


compensatio shall not be held liable or entertain any claim of the private
n for risks party for a risk, which is not specified in the public private
not covered. partnership agreement.

Termination 28. A party to the PPP Agreement may terminate the


of PPP agreement in the following cases:
agreement.
(a) If the Government Agency fails to comply with
any major obligation in the PPP agreement,
and such failure is not remediable or, if
remediable, remains un-remedied for an
unreasonable period of time, the private party
may terminate the agreement with written
notice to the Government agency as provided
in the PPP agreement and, in the event of
such termination, the project shall be
transferred to the Government Agency and the
private party shall be entitled to compensation
by the Government Agency as provided in the
PPP Agreement; and

(b) If the private party fails to perform the


agreement, or fails to achieve the prescribed
technical and performance standards, or fails
to comply with any major obligations in the
PPP agreement, and such failure is not
remediable or, if remediable, remains un-
remedied for an unreasonable period of time,
the Government Agency may terminate the
agreement with written notice to the private
party as provided in the PPP agreement and,
in such a case the Government Agency may
either take over the project and assume all
related liabilities or allow lenders of the private
party to exercise their rights and interests as
specified in the (loan) agreements relating to
the project.

Public 29. (1) A PPP Agreement or any other ancillary or


disclosure. additional agreement shall be a public document.

(2) The Government Agency shall make


32

arrangements for inspection or provision of copies of a PPP


Agreement or any other ancillary or additional agreement.

(3) Any person may, subject to the payment of the


prescribed fee and any other reasonable restriction, inspect or
obtain copies of a PPP agreement or any other ancillary or
additional agreement.
(4) The Committee may, by recording reasons in
writing, declare the complete or part of a document not to be a
public document.

Prescribing 30. (1) The Government may:


and enforcing
standards. (a) prescribe and enforce performance standards for
a project including standards or performance of
the private party with regard to the services to be
rendered by it to the end users;
(b) prescribe quality standards including standards of
materials, equipment and other resources or
processes relevant to infrastructure projects
including planning criteria, construction practices
and standards of such facilities operating
standards and maintenance schedules for
regulating the working of the private party to
ensure efficiency and adherence to the prescribed
quality standards;
(c) prescribe the mode of output-based contracting,
performance-based payment system and output-
based procurement procedures;
(d) establish a uniform system of accounts to be
followed by the private party;
(e) take steps to promote effective competition and
efficiency in projects using the public private
partnership approach;
(f) prescribe the mode of conducting public hearing
and consultation with stakeholders; and
(g) prescribe any other standards for regulating the
infrastructure development through public private
partnership.

Recovery of 31. (1) The Government Agency may recover the sum
costs, dues due from the private party as ascertained through the dispute
and fees. resolution procedure under this Act as arrears of land revenue
under the Balochistan Land Revenue Act, 1967.
33

(2) The Government Agency shall designate an


officer as Collector to exercise the powers of the Collector
under the Balochistan Land Revenue Act, 1967 for recovery of
arrears under this Act.

Protection of 32. No suit, claim or other legal proceedings shall lie against
action taken the Committee, a Government Agency or any member, officer,
in good faith. servant, adviser or a representative of the Committee in respect
of anything done or intended to be done in good faith under this
Act or under any rules or regulation made under the Act.

Power to 33. The Government may, by notification in official Gazette,


make rules. make rules for carrying out the purposes of this Act.

Power to 34. Subject to this Act and the rules, the Committee may,
frame with the prior approval of the and by notification in the official
regulations. Gazette, frame regulations to give effect to the provisions of this
Act.

Applicability 35. (1) The provisions of this Act shall apply to a project
to of any Government Agency if the estimated total cost of such
Government project exceeds fifty million rupees.
Agencies.
(2) A Government Agency may request the
Committee to process a project with an estimated total cost of
fifty million rupees or less, and the Committee shall proceed
with the project in the manner as if it falls within its jurisdiction.

Power to 36. To meet the development objective, the Government may, by


amend a notification in the official Gazette amend a Schedule.
Schedule.

Power to 37. Subject to this Act, the rules made hereunder, the
fame Committee may approve procedures and guidelines to make
guidelines. operations under this Act, efficient, transparent and effective.

Overriding 38. Notwithstanding anything contained in any other law, the


provision. provisions in this Act shall have effect to the extent of the
project under this Act.

Removal of 39. If any difficulty arises in giving effect to any provision of


difficulties this Act, the Government may, by notification in the official
34

Gazette, make such provisions as may appear to it to be


necessary for the purpose of removing such difficulty.

FIRST SCHEDULE

Sectors. 1. Transportation including mass transit projects;


2. Communication (roads and bridges) projects;
3. Water including desalination plants, water distribution
systems, collection of user charges, sanitation, irrigation,
drainage, sewerage and solid waste management
projects;
4. Power generation projects including those based on
alternate energy sources;
5. Health and education sectors projects (construction,
management, operation and maintenance etc.);
6. Housing and facilities management contract(s);
7. Logistics warehousing, wholesale markets, silos,
slaughter houses, agriculture and livestock farms etc;
8. Food operations;
9. Relief, rehabilitation and reconstruction;
10. Automation to improve public service delivery;
11. Public service delivery and management;
12. Industrial projects including industrial parks / estates and
special economic zones;
13. Mining projects, excluding those which are sub-judice in
any court of law; and
14.Tourism projects including cultural centers, entertainment
facilities, sports facilities, recreational facilities and other
tourism-related infrastructure, particularly with reference
to development of tourism along Balochistan coastline (in
context of CPEC).

SECOND SCHEDULE.

Types of PPP 1. Build and Transfer (BT). A contractual arrangement


Agreements whereby the private party undertakes the financing and
may include. construction of an infrastructure project and after its completion
hands it over to the Government Agency. The Government
Agency reimburses the total project investment, on the basis of
an agreed schedule. This arrangement may be employed in the
construction of any infrastructure project, including critical
facilities, which for security or strategic reasons must be
operated directly by the Government Agency.
35

2. Build Lease and Transfer (BLT). A contractual


arrangement whereby the private party undertakes the
financing and construction of an infrastructure project and upon
its completion hands it over to the Government Agency on a
lease arrangement for a fixed period, after the expiry of which
ownership of the project is automatically transferred to the
Government Agency.

3. Build Operate and Transfer (BOT). A contractual


arrangement whereby the private party undertakes the
financing and construction of an infrastructure project and the
operation and maintenance thereof. The private party operates
the facility over a fixed term during which it is allowed to collect
from project users' appropriate tariffs, tolls, fees, rentals, or
charges not exceeding those proposed in the bid or negotiated
and incorporated in the PPP agreement to enable the private
party to recover its investment and operation and maintenance
expenses for the project. The private party transfers the facility
to the Government Agency at the end of the fixed term that
shall be specified in the PPP agreement. This includes a
supply-and-operate situation, which is a contractual
arrangement whereby the supplier of equipment and machinery
for an infrastructure project operates it, providing in the process
technology transfer and training of the nominated individuals of
the Government Agency.

4. Build Own and Operate (BOO). A contractual


arrangement whereby the private party is authorized to finance,
construct, own, operate and maintain an infrastructure project,
from which the private party is allowed to recover its investment
and operation and maintenance expenses by collecting user
levies from project users. The private party owns the project
and may choose to assign its operation and maintenance to a
project operator. The transfer of the project to the Government
Agency is not envisaged in this arrangement. However, the
Government Agency may terminate its obligations after the
specified time period.

5. Build Own Operate Transfer (BOOT). A contractual


arrangement similar to the BOT agreement, except that the
private party owns the infrastructure project during the fixed
term before its transfer to the Government Agency.
36

6. Build Transfer and Operate (BTO). A contractual


arrangement whereby the Government Agency contracts out an
infrastructure project to the private party to construct it on a
turn-key basis, assuming cost overruns, delays and specified
performance risks. Once the project is commissioned, the
private party is given the right to operate the facility and collect
user levies under the PPP agreement. The title of the project
always vests in the Government Agency in this arrangement.

7. Contract Add and Operate (CAO). A contractual


arrangement whereby the private party expands an existing
infrastructure facility, which it leases from the Government
Agency. The private party operates the expanded project and
collects user levies to recover the investment over an agreed
period. There may or may not be a transfer arrangement with
regard to the added facility provided by the private party.

8. Develop Operate and Transfer (DOT). A contractual


arrangement whereby favourable conditions external to an
infrastructure project, which is to be built by the private party,
are integrated into the PPP agreement by giving it the right to
development adjoining property and thus enjoy some of the
benefits the investment creates such as higher property or rent
values.

9. Joint Venture (JV). Joint venture is a form of public


private partnership in which both the Government Agency and
the private party make equity contributions and pool their
resources towards the project development and implements the
project by forming a new company (Joint Venture Company) or
assuming joint ownership of an existing company through the
purchase of shares. When the joint venture company is
established, it will have a separate legal identity and it is
through this company that the common enterprise of the public
and private partners will be carried out. The Government
Agency and the private party will own the shares of the joint
venture company and there will be a board of directors, usually
made up of representatives of the shareholders.

10. Management Contract (MC). A contractual


arrangement whereby the Government Agency entrusts the
operation and management of an infrastructure project to the
private party for an agreed period on payment of specified
consideration. The Government Agency may charge the user
37

levies and collect the same either itself or entrust the collection
for consideration to any person who shall pay the same to the
Government Agency.

11. Rehabilitate Operate and Transfer (ROT). A


contractual arrangement whereby an existing infrastructure
facility is handed over to the private party to refurbish, operate
and maintain it for a specified period, during which the private
party collects user levies to recover its investment and
operation and maintenance expenses. At the expiry of this
period, the facility is returned to the Government Agency. The
term is also used to describe the purchase of an existing facility
from abroad, importing, refurbishing, erecting and operating it.

12. Rehabilitate Own and Operate (ROO). A contractual


arrangement whereby an existing infrastructure facility is
handed over to the private party to refurbish, operate and
maintain with no time limitation imposed on ownership. The
private party is allowed to collect user levies to recover its
investment and operation and maintenance expenses in
perpetuity.

13. Service Contract (SC). A contractual arrangement


whereby the private party undertakes to provide services to the
Government Agency for a specified period with respect to an
infrastructure facility. The Government Agency will pay the
private party an amount according to the agreed schedule.

SHAMS-UD-DIN
Secretary.

You might also like